An overview of tax practice issues that arise under statement on standards in personal financial planning services.

• Author: Purcell, Thomas J., III

This column discusses some of the issues that might arise for tax practitioners in light of Statement on Standards in Personal Financial Planning Services (SSPFPS No. 1, or the Standard).The Standard, which was promulgated by the AICPA Personal Financial Planning (PFP) Executive Committee, went into effect July 1,2014. Since the PFP Executive Committee has standard-setting powers under the AICPA governing structure, this Standard applies to all AICPA members who meet the specific covered PFP service rules. The Standard provides authoritative guidance in the performance of PFP services, whether oral or written, and whether alone or as a part of another engagement.

The Standard provides direction to CPAs in the delivery of PFP services in meeting the general standard of competence under the AICPA Code of Professional Conduct (the AICPA Code). While the general standard has always required a CPA to be competent in the delivery of services, the Standard provides a specific road map for meeting that requirement.

Every member should become familiar with the Standard and appropriately apply it to his or her practice. This is especially true for tax practitioners, as tax planning could include a service that would bring the engagement within the Standard.

This column provides an overview of the Standard's major requirements, when they apply, a member's responsibilities under the Standard, competing considerations, and the resources available to help members effectively implement and apply the Standard. In addition, specific instances involving tax practice are discussed.

Personal financial planning is defined as the process of identifying personal financial goals and resources, designing financial strategies, and making personalized recommendations (whether written or oral) that, when implemented, assist the client in achieving his or her personal financial goals. PFP services may include implementation of recommendations or monitoring or updating the engagement as well as recommending that a client seek out a particular professional adviser regarding appropriate strategies to meet financial goals. PFP services typically encompass activities such as cash flow planning; risk management and insurance planning; retirement planning; investment planning; estate, gift, and wealth transfer planning; elder planning; charitable planning; education planning; and, especially important for tax practitioners, tax planning.

The Standard, which works in tandem with other AICPA and professional standards, including the Statements on Standards for Tax Services (SSTSs), the AICPA Code, Treasury Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10), and relevant ethical requirements, sets forth enforceable criteria for evaluating the quality of a member's PFP services. If, as part of a PFP engagement, a member performs an activity covered by another applicable standard, such as advising on income tax matters subject to the SSTSs, the specific activity is covered by the other applicable rules, but the entire engagement is subject to the Standard. Importantly, members also should determine whether the PFP services they provide rise to the level of services subject to the Investment Advisers Act of...